COMMISSIONER OF INCOME TAX Vs. SHANWARMAL SHIVAKUMAR

JUDGEMENT

(1.) THE following question of law has been referred by the Tribunal arising out of its order in respect of the asst. yr. 1976-77 under s. 27(1) of the WT Act, 1957 (`the Act') :

(2.) THE facts as found by the Tribunal are that the assessee is an HUF and was having 800 shares of the Bank of Rajasthan Ltd., the value of which was fully covered by exemption under s. 5(1)(xxiii) of the Act, their value for the asst. yr. 1974-75 being less than Rs. 1,50,000. THE assessee obtained a loan and purchased 1150 shares adjusting 50 percent of the purchase price amounting to Rs. 57,500 out of the borrowed next preceding previous year relevant to the asst. yr. 1973-74. This position continued in the later years except for asst. yrs. 1975-76 and 1976-77, when the amount of borrowed money was reduced to Rs. 1,02,053 in each year. While considering the claim of the non-petitioner assessee in accordance with s. 2(m)(ii) of the Act, the WTO allowed the entire claim of the old 500 shares under s. 5 and the balance amount was also allowed from the total value of newly acquired 1150 shares and the result of this deduction was that out of newly purchased 1150 shares exemption of Rs.42,000 was allowed for the asst. yr. 1972-73, Rs. 47,000 for asst. yr. 1973-74, Rs. 56,500 for asst. yr. 1974-75, Rs. 41,500 for asst. yr. 1975-76 and Rs. 47,760 for asst. yr. 1976-77. THE borrowed money to this extent was treated by the WTO to have been used for acquiring the share and on which no tax was payable.